RM Infrastructure Income PLC
Annual Report & Accounts
for the year ended 31 December 2023
Responsible investing
Through active stakeholder engagement combined with the integration of environmental, social and corporate governance considerations throughout the investment process.
RM Infrastructure Income PLC
Annual Report & Accounts 2023
Contents
Strategic report | Page |
About us | 1 |
Portfolio at a glance | 2 |
Market | 7 |
Company objectives | 8 |
Chair's statement | 9 |
Investment Manager's report | 11 |
Investment policy, results and other information | 13 |
Risks and risk management | 15 |
Stakeholder engagement | 18 |
Environmental, Social and Governance ("ESG") | 21 |
Governance | |
Directors' report | 24 |
Corporate governance | 30 |
Directors' remuneration policy report | 35 |
Directors' remuneration report | 36 |
Report of the Audit and Management Engagement Committee | 38 |
Directors' responsibility statement | 40 |
Independent Auditor's report | 41 |
Financial statements | |
Statement of comprehensive income | 48 |
Statement of financial position | 49 |
Statement of changes in equity | 50 |
Statement of cash flows | 51 |
Notes to the financial statements | 53 |
Other information | |
Alternative Performance Measures ("APMs") | 74 |
Glossary | 77 |
Directors, Investment Manager and Advisers | 79 |
rm-funds.co.uk
Strategic report >
Governance Financial statements Other information
Portfolio at a glance Market Company objectives Chair's statement Investment Manager's report
Investment policy, results and other information Risks and risk management
Stakeholder engagement
ESG
RM Infrastructure Income PLC
Annual Report & Accounts 2023
About us
At a General Meeting held on 20 December 2023, RM Infrastructure Income plc ("RMII" or the "Company") adopted a revised Investment Objective in order to facilitate a managed wind-down of the Company.
The Company aims to conduct an orderly realisation of the assets of the Company, to be effected in a manner that seeks to achieve a balance between returning cash to Shareholders promptly and maximising value.
Prior to this, the Company's investment objective was to generate attractive and regular dividends through investment in secured debt instruments of UK Small and Medium sized Enterprises ("SMEs") and mid-market corporates including any loan, promissory notes, lease, bond, or preference share (such debt instruments, as further described on page 13, being "Loans") sourced or originated by RM Capital Markets Limited (the "Investment Manager") with a degree of inflation protection through index-linked returns where appropriate.
Company highlights (as at 31 December 2023)
6.5p £104.5m
Dividend pence per share | Gross assets | |
0.969x 3.16%
Dividend cover | NAV Total Return | |
1
RM Infrastructure Income PLC
Annual Report & Accounts 2023
Portfolio at a glance
Operational highlights
- Diversified portfolio with gross assets of £104.5m invested across 31 loans and one wholly owned asset, across 8 sectors and 14 sub-sectors.
- A low interest rate sensitivity portfolio, with an average duration of circa 1.69 years and a weighted average yield of 10.91%.
- NAV Total Return over the last twelve months of 3.16% and inception to date of 41.56%.
- As at 31 December 2023, all outstanding debt has been fully repaid with the company now completely ungeared.
Financial highlights
Financial information | Year ended | Year ended | ||
31 December 2023 | 31 December 2022 | |||
Gross asset value (£'000) | £104,516 | £126,076 | ||
Net Asset Value ("NAV") (£'000) | £104,516 | £108,805 | ||
NAV per Ordinary Share (pence) | 88.88p | 92.49p | ||
Ordinary Share price (pence) | 74.25p | 85.00p | ||
Ordinary Share price discount to NAV1 | (16.46%) | (8.1%) | ||
Ongoing charges1 | 1.84% | 1.86% | ||
Gearing (net)1 | nil | 13.1% | ||
Performance summary | % change2,4 | % change3,4 | ||
Total return - Ordinary Share NAV and dividends1 | +3.16% | +5.0% | ||
Total return - Ordinary Share price and dividends1 | -4.63% | +3.7% | ||
- These are Alternative Performance Measures ("APMs").
- Total returns for the year to 31 December 2023, including dividend reinvestment.
- Total returns for the year to 31 December 2022, including dividend reinvestment. 4.Source: Bloomberg.
As at 19 April 2024, the latest date prior to the publication of this document, the Ordinary Share price was 77p per share and the latest published NAV was 89.18p per share as at 31 March 2024.
Alternative Performance Measures ("APMs")
The financial information and performance summary data highlighted in the footnote to the above table is considered to represent APMs of the Company. Definitions of these APMs together with how these measures have been calculated can be found on pages 74 to 76.
2
Strategic report >
Governance Financial statements Other information
Portfolio at a glance Market Company objectives Chair's statement Investment Manager's report
Investment policy, results and other information Risks and risk management
Stakeholder engagement
ESG
RM Infrastructure Income PLC
Annual Report & Accounts 2023
Sector breakdown (as at 31 December 2023)
Healthcare | Care home: 16% | ||
Health and well-being:10% | |||
Specialist care: 4% | |||
Hotel & Leisure | Hotel: 30% | ||
Accommodation | Student accommodation: 8% | ||
Asset Backed Lending | Asset Backed Lending: 5% | ||
Manufacturing | Auto parts manufacturer: 11% | ||
Construction | Construction: 4% | ||
Energy efficiency | Energy efficiency: 5% | ||
Other | Childcare & Education: 4% | ||
Transport Assest -Ports business: 2% | |||
Commercial Property - Restaurant: 1% | |||
Other | |||
Energy Efficiency | 7% | ||
Construction | 5% | ||
4% | Healthcare | ||
30% | |||
Manufacturing | 11% | ||
Asset Backed | 5% | ||
Lending | |||
8% | |||
Accommodation | |||
30% |
Hotel & Leisure
Fund performance since inception
% Total returns to date
145
RMII NAV Total Return of: 42%
RMII Share Price Total Return of: 19%
135
S&P Global Leveraged Loan Index GBP Hedged Total Return of: 24%
125
115
105
95
85 | |||||||||||||||||||||||||||||||
Jul | Oct | Jan | Apr | Jul | Jun | Apr | Jul | Oct | Jan | Apr | Jul | Sep Dec Mar Jun Sep Dec | |||||||||||||||||||
Feb | April | Sep | Dec Mar | Sep Nov Feb May Aug Nov Feb | |||||||||||||||||||||||||||
17 | 18 | 21 | 22 | ||||||||||||||||||||||||||||
17 | 17 | 17 | 18 | 18 | 18 | 18 | 19 | 19 | 19 | 19 | 20 | 20 | 20 | 20 | 21 | 21 | 21 | 22 | 22 | 22 | 22 | 23 | 23 | 23 | 23 | ||||||
Distribution record (pence per share)
Investment portfolio since inception
50 | 6.5 | 43.725 | |||||||
45 | 43 | ||||||||
40 | 6.5 | ||||||||
35 | 6.5 | ||||||||
30 | |||||||||
6.5 | |||||||||
25 | |||||||||
20 | 7.025 | ||||||||
15 | 6.5 | ||||||||
10 | |||||||||
4.2 | |||||||||
5 | |||||||||
0 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 Achieved Target | ||
Environmental Infrastructure Social Infrastructure
Other (Non Core)
4.99 | |
% | |
52.82% | 42.19% |
3
RM Infrastructure Income PLC
Annual Report & Accounts 2023
Portfolio at a glance
continued
Portfolio (as at 31 December 2023)
Largest 10 loans by drawn amounts across the entire portfolio
Investment type | Valuation† | Percentage of | |||
Business activity | (Private/Public/Bond) | £'000 | gross asset (%) | ||
Healthcare | Private Loans | 12,994 | 12.40 | ||
Manufacturing | Private Loans | 9,980 | 9.50 | ||
Healthcare | Private Loans | 8,799 | 8.40 | ||
Hotel & Leisure | Private Loans | 8,115 | 7.80 | ||
Hotel & Leisure | Private Loans | 5,287 | 5.10 | ||
Asset Backed Lending | Private Loans | 4,707 | 4.50 | ||
Accommodation | Private Loans | 4,434 | 4.20 | ||
Hotel & Leisure | Private Loans | 4,178 | 4.00 | ||
Hotel & Leisure | Private Loans | 3,691 | 3.50 | ||
Healthcare | Private Loans | 3,654 | 3.50 | ||
Ten largest holdings | 65,839 | 62.90 | |||
Other private loan investments | 25,127 | 24.10 | |||
Wholly owned asset | 2,966 | 2.80 | |||
Total holdings | 93,932 | 89.80 | |||
Other net current assets | 10,584 | 10.20 | |||
Gross assets* | 104,516 | 100.00 | |||
- The Company's gross assets comprise the net asset values of the Company's Ordinary Shares and the Bank loan, which had been repaid at the year end, calculation can be found on page 74.
† Valuation of private loans conducted by external Valuation Agent.
31 10.91%
Number of loans | Average yield | |
4
Strategic report >
Governance Financial statements Other information
Portfolio at a glance Market Company objectives Chair's statement Investment Manager's report
Investment policy, results and other information Risks and risk management
Stakeholder engagement
ESG
RM Infrastructure Income PLC
Annual Report & Accounts 2023
Full portfolio (as at 31 December 2023)
Loan | Borrower | Business | Market | |||||||
ref# | name | Deal type | Sector | description | Nominal (£) | value (£) | Valuer | Payment | ||
88 | Private Loan - SPV | Bilateral Loan | Healthcare | Care home | 12,871,346 | 12,994,338 | V Agent | Cash | ||
39 | Beinbauer | Syndicated Loan | Manufacturing | Auto Parts Manufacturer | 10,022,097 | 9,980,275 | V Agent | PIK/Cash | ||
76 | Gym Franchise | Bilateral Loan | Healthcare | Health and Well-being | 8,553,696 | 8,798,765 | V Agent | Cash | ||
66 | Private Loan - SPV | Bilateral Loan | Hotel & Leisure | Hotel | 8,504,440 | 8,115,336 | V Agent | Cash | ||
67 | Private Loan - SPV | Bilateral Loan | Hotel & Leisure | Hotel | 5,540,560 | 5,287,063 | V Agent | Cash | ||
15 | Voyage Care | Bond | Healthcare | Specialist Care | 5,000,000 | 3,654,167 | External | Cash | ||
80 | Private Loan - SPV | Bilateral Loan | Hotel & Leisure | Hotel | 5,000,000 | 3,690,514 | V Agent | Cash | ||
60 | Private Loan - SPV | Bilateral Loan | Asset Backed Lending | Asset Backed Lending | 4,693,916 | 4,707,150 | V Agent | Cash | ||
79 | Private Loan - SPV | Bilateral Loan | Construction | Construction | 4,500,000 | 3,321,462 | V Agent | Cash | ||
12 | Private Loan - SPV | Bilateral Loan | Accommodation | Student accommodation | 4,430,000 | 4,434,438 | V Agent | Cash | ||
73 | Private Loan - SPV | Bilateral Loan | Hotel & Leisure | Hotel | 4,000,000 | 4,178,126 | V Agent | Cash | ||
68 | Equity | Equity | Accommodation | Student accommodation | 3,600,000 | 2,966,261 | V Agent | N/A | ||
62 | Trent Capital | Bilateral Loan | Energy Efficiency | Energy Efficiency | 3,259,437 | 3,026,936 | V Agent | PIK | ||
58 | Private Loan - SPV | Bilateral Loan | Hotel & Leisure | Hotel | 3,107,657 | 2,697,306 | V Agent | PIK | ||
99 | Private Loan - SPV | Bilateral Loan | Hotel & Leisure | Hotel | 2,881,472 | 2,907,875 | V Agent | Cash | ||
92 | Private Loan - SPV | Bilateral Loan | Hotel & Leisure | Hotel | 2,458,629 | 1,814,721 | V Agent | Cash | ||
95a | Private Loan - SPV | Bilateral Loan | Childcare & Education | Childcare | 2,349,061 | 2,132,123 | V Agent | Cash | ||
71 | Euroports | Syndicated Loan | Transport Assets | Ports business | 1,733,853 | 1,681,838 | External | Cash | ||
96 | Private Loan - SPV | Bilateral Loan | Energy Efficiency | Energy Efficiency | 1,539,700 | 1,601,159 | V Agent | Cash | ||
97a | Private Loan - SPV | Bilateral Loan | Healthcare | Care home | 1,258,536 | 1,286,099 | V Agent | Cash | ||
74 | Private Loan - SPV | Bilateral Loan | Accommodation | Student accommodation | 930,000 | 0 | V Agent | Cash | ||
87 | Private Loan - SPV | Bilateral Loan | Commercial Property | Restaurant | 782,623 | 796,761 | V Agent | Cash | ||
76.1 | Gym Franchise | Bilateral Loan | Healthcare | Health and Well-being | 747,017 | 765,684 | V Agent | PIK | ||
98 | Private Loan - SPV | Bilateral Loan | Childcare & Education | Childcare | 742,500 | 791,403 | V Agent | Cash | ||
63 | Trent Capital (Fusion) RF | Bilateral Loan | Energy Efficiency | Energy Efficiency | 612,844 | 0 | V Agent | PIK | ||
97b | Private Loan - SPV | Bilateral Loan | Healthcare | Care home | 566,036 | 568,330 | V Agent | Cash | ||
81 | Private Loan - SPV | Bilateral Loan | Finance | Wealth Management | 500,000 | 501,839 | V Agent | Cash | ||
95b | Private Loan - SPV | Bilateral Loan | Childcare & Education | Childcare | 468,212 | 444,630 | V Agent | Cash | ||
91 | Private Loan - SPV | Bilateral Loan | Childcare & Education | School | 450,000 | 448,467 | V Agent | Cash | ||
94a | Gym Franchise | Bilateral Loan | Healthcare | Health and Well-being | 228,170 | 239,265 | V Agent | Cash | ||
52 | Private Loan - SPV | Bilateral Loan | Clean Energy | Renewable heat incentive | 13,496 | 13,665 | V Agent | Cash | ||
Total | 101,345,298 | 93,931,896 | ||||||||
5
RM Infrastructure Income PLC
Annual Report & Accounts 2023
Portfolio at a glance
continued
Portfolio statistics1 (as at 31 December 2023)
CBILS/RLS Guarantee
Investment 15%
Coupon
Senior
47%1
Fixed
82%
Hold | Co | Junior | ||
14% | 24% | |||
Floating
18%
0% | 10% | 20% | 30% | 40% | 50% | 60% | 70% | 80% | 90% | 100% |
Portfolio analysis (as at 31 December 2023)
Portfolio focused on relatively short dated high yielding fixed rate loans with 100% of the portfolio loan tenor sub 5 years.
Investments ranking1
Senior: 47%
Junior: 24%
Hold Co: 14%
CBILS / RLS Loans: 15%
Coupon type
Fixed: 82%
Floating: 18%
Index-linked:0%
Annualised yield | Maturity profile | |||||
< 7.5% yield: 6% | 0-3 years: 90% | |||||
7.5-9.5% yield: 35% | 3-5 years: 10% | |||||
> 9.5% yield: 59% | > 5 years: 0% | |||||
1. Including wholly owned asset
6
Strategic report >
Governance Financial statements Other information
Portfolio at a glance Market Company objectives Chair's statement Investment Manager's report
Investment policy, results and other information Risks and risk management
Stakeholder engagement
ESG
RM Infrastructure Income PLC
Annual Report & Accounts 2023
Market
Market environment
For interest rate products, the market was very weak for the first half of the year with UK government bond yields rising from January 2023 and peaking during late June 2023, with 5-year UK yields touching circa 4.9%. The remaining three months of the year saw a sustained rally with 5-year UK yields closing at circa 3.5%. Credit spreads were strong during the reporting period with the Markit iTraxx Crossover Index opening at circa 400 and closing at circa 310 - although the journey was not linear as spreads widened to circa 500 in March 2023, before tightening over the summer to then widen into the autumn before a strong year end saw spreads tighten from 460 in October to close the year at 310.
Overall, whilst the market environment for credit was relatively benign, the high level of the Sterling Overnight Average "SONIA" is providing tighter financial conditions. Borrowers who are seeking a refinance are seeing SONIA levels above 5% currently, which will affect their ability to refinance. In the US markets in particular, we are starting to see this affecting Commercial Real Estate "CRE" and we expect this to continue whilst front end interest rates remain elevated.
Markit iTraxx Europe Crossover index
The Markit iTraxx Europe Crossover index
550
500
points | 450 |
basis | |
Spread, | 400 |
350 | |
300 | |
23 | |
Jan |
23 Feb
23 Mar
23 Apr
23 May
23 Jun
Jul23
23 | |
ug | |
A |
23 Sep
23 Oct
23 ec23
Nov D
comprises 75 equally weighted credit default swaps on the most liquid sub-investment grade European corporate entities. This is the most liquid reference point for high yield credit in Europe. Spreads opened the year at 460bps and softened throughout the year, tightening down to 310bps end of December 2023.
7
RM Infrastructure Income PLC
Annual Report & Accounts 2023
Company objectives
Although the Company has demonstrated strong NAV total return performance over the longer term the discount to NAV per Share at which the Shares trade has been both wide and persistent despite measures taken by the Board to seek to address this through the use of buybacks and the provision of a periodic realisation opportunity. This, coupled with the small scale of the Company and the low levels of liquidity in the Company's shares has restricted the Company's ability to grow.
As set out in the Company's announcement on 23 May 2023, in April 2023 the Board received a non-binding indicative proposal which involved a combination of all the Company's assets with another investment company managed by Gravis Capital Partners (as disclosed on 11 August 2023). The combination was proposed to be structured under section 110 of the Insolvency Act 1986 with no option, partial or otherwise, for you as a shareholder to elect to receive cash.
The proposal was considered alongside a wide array of potential options under a broader review of the Company's future strategy: a potential continuation of the Company's existing investment policy and strategy, a full or partial exit opportunity, a combination of the Company's assets with another suitable investment company or fund and a managed wind-down. The Board consulted with Shareholders on these options and concluded that a partial exit opportunity would only exacerbate the challenges the Company faces, as it would further reduce the size of the Company.
Following the receipt of the first proposal, the Board received two additional business combination proposals, as described in the Company's announcement on 10 July 2023.
Having considered the various proposals in detail, the Board concluded that no better option existed which was likely to receive the required Shareholder consent, and on 6 September 2023, the Board announced its decision to put forward a proposal for a managed wind-down of the Company. Consequently, on 20 December 2023, the Company revised its objective to implement a managed wind-down of the company. Its revised objective is as follows:
Revised objective
- The Company aims to conduct an orderly realisation of the assets of the Company, to be effected in a manner that seeks to achieve a balance between returning cash to Shareholders promptly and maximising value.
The managed wind-down process is monitored closely by the Board further details can be found in the Directors' report on page 24. The Investment Manager keeps the Board updated on latest developments as the managed wind-down process progresses which is also discussed at each of the Company's quarterly Board meetings.
8
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RM Infrastructure Income plc published this content on 24 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 April 2024 08:59:09 UTC.